Business

12:12 pm

Wed October 30, 2013

Possible Reasons Boeing Plans 777X Design Outside of Seattle

In a blow to Boeing's traditional base in the Puget Sound region, the company says it will do "much of the detailed design" for its next 777 wide-body jet in other states and Russia.

Two top executives in Boeing's Commercial Airplanes division, Mike Delaney and Scott Fancher, told employees in a memo today that engineering teams in Charleston, South Carolina; Huntsville, Alabama; Long Beach, California; Philadelphia; and St. Louis. Engineers in Moscow will also help.

As for the Seattle region, "at this time, no decisions have been made about 777x design or build in the Puget Sound," the executives wrote. Spokesman Doug Alder said the company still plans to launch the plane by the end of the year.

Boeing is critical to the Washington state economy. Even though the company's corporate headquarters are in Chicago, Washington state has the most Boeing workers—84,000 as of late September.

But headcount here has been decreasing this year as Boeing shifts some work, including engineering and information technology, to other states. At the end of January, Boeing employed more than 86,000 people here.

Possible Reasons

Aviation analyst Scott Hamilton says there's a combination of possible reasons behind Boeing's announcement on 777x engineering work. He says it may be part of Boeing's "continued war" on its engineering union, the Society of Professional Engineering Employees in Aerospace, or SPEEA, after engineers came close to a strike earlier this year.

He says it also may be an indication that Boeing plans to locate the 777x assembly line in South Carolina, where it builds some 787 Dreamliners.

And third, Hamilton says it may be a strategic move to solicit more incentives out of either Washington state or South Carolina.

"Boeing is extremely adept at undertaking economic blackmail, as I call it, to Washington state and keeping Washington in the dark and in a state of concern," Hamilton said.

Moving Work In-House?

Ray Goforth, executive director of the engineering union, SPEEA, says he doesn't think the announcement signals a shift of design work away from the Puget Sound region. The union represents about 22,000 engineers and technical workers in Washington.

Rather, he thinks Boeing is simply bringing more design work back in-house after problems the company encountered when it outsourced engineering for the 787 Dreamliner.

"This is part of the lessons learned that the company had from the 787 program—that when they lose configuration control over this engineering, it leads to problems and schedule slides," Goforth said. "So by moving that work from suppliers and partners back within the company, they’re going to have greater control of that work."

He says the company also appears to be spreading work to locations that typically do defense projects, perhaps as a response to federal budget cuts.

Governor: Still a Chance to Build Planes

Gov. Jay Inslee called Wednesday's news disappointing, but added that Washington state still has the opportunity to build the plane here.

“That’s why I am working, as we speak, with a bipartisan group of legislators to craft a significant package of investments that will further demonstrate to Boeing why Washington is the best place to build the 777X,” Inslee said.

The package will include cost-saving measures including an extension of tax incentives, a transportation package, streamlined permitting, and education investments, the governor said.